RBS Six-Month Loss As Fines And Charges Hit

Restructuring charges and fines took their toll on profitability at Royal Bank of Scotland (RBS) in the first-half of the year.

The part-nationalised group, which includes the NatWest and Ulster Bank brands in its stable, made a loss of £153m compared to a profit of £1.4bn in the same period last year.

It took a £1.3bn hit for banking scandal fines and costs, including £459m in its second quarter, and also booked a £1.5bn charge in restructuring costs.

Chief executive Ross McEwan warned of more pain to come as the bank faced further fines for "conduct issues of the past", telling Sky News the industry may never see the back of misconduct problems given the regulatory crackdown.

He said in the results statement: "I don't like seeing losses and I'll not rest until these charges are behind us".

RBS said it remained exposed to costs associated with US mortgage-backed securities, foreign exchange trading and its treatment of UK small business customers.

It added that mis-selling of payment protection insurance (PPI) and interest rate hedging products were also expected to result in further costs.

The group also admitted it was talking to regulators following its latest IT failure last month , when its overnight payments system crashed, delaying 600,000 transactions.

A number of customers affected were yet to receive compensation, RBS admitted.

But Mr McEwan insisted performance in the core bank was continuing to improve - important give that the Government has signalled its intention to start the long process of returning RBS, still almost 80% owned by the taxpayer, to private hands.

He pointed to underlying operating profits for the half-year being 2% higher year-on-year at £3.5bn and told Sky News: "I was pleased with the progress we made and the quarterly results show that.

"The bank is getting through a number of the issues it has been facing. We've seen capital up, costs down and also the core bank performing very well so the bank is in much better shape for the Government to start thinking about whether it's going to sell."

The bank said it aimed to further boost profitability by going "further and faster" with its restructuring - threatening more job losses in its corporate banking business.

The restructuring of RBS in the wake of its taxpayer bailout has resulted in one in ten employees, on average, losing their jobs per year.

RBS is looking to focus on its UK retail operation and expects to complete the sale of its majority stake in US operation Citizens by the end of the year and spin-off its Williams & Glyn arm next summer to satisfy European rules on state aid.